Recent weather has been mostly favorable overall and the highly rated corn and soybean crops have caused the markets to drift lower. With the calendar flipping to August, much of the focus will continue to be on weather. August weather is critical for soybean yields and grain fill in corn. Updated weather models have turned warmer over the weekend, renewing some production concerns. Some key growing areas in the western Corn Belt are getting quite dry, grabbing more headlines. The Commodity Weather Group predicts 15% of the U.S. corn and soybean crop will be under stress in the next 10 days.
Crop progress was as expected for the week. Corn ratings remain unchanged at 72% good/excellent with improvements in Illinois, Nebraska, Minnesota, and Kansas but Iowa declined due to a lack of moisture in half of the state. Pollination improved 10% to 92% silking, 5% ahead of the 5-year average, with corn in dough stage at 39%, 6% over the 5-year average. Soybean ratings improved 1% from the previous week to 73% good/excellent with improvements in North Dakota and Indiana but declining in Iowa. Soybeans blooming are at 85%, up 9% for the week and 3% over the 5-year average. Soybeans setting pods are at 59%, 5% over the 5-year average.
The saying crop ratings do not correlate to yield holds true when you look at vegetative health index satellite imaging (VHI). The states of Iowa, Michigan, Wisconsin and Ohio have lower vegetative scores than last year for corn. However, the crop ratings for those four states are 12-19% higher than last year. Another year with questions if the dry areas of western Iowa and the Eastern Corn Belt will offset by potential record yields in Illinois, Wisconsin and Minnesota.
Trade will continue to monitor the weekly crop conditions for ideas of crop size. The current soybean rating is the highest it’s been since 1994. The corn crop also ranks among the highest in recent history, leading most in trade to expect above trend yields.
More attention is being placed on Iowa’s crop conditions after reduced ratings in the past two weeks. For the month of July, the majority of the state received much less rain than normal, with some areas reporting only 15% of their average. Rain is forecasted for some of the areas suffering, but the amount is expected to be light. High quality soils and ample sub-soil moisture going into planting has helped maintain the crops up to this point. Improving conditions in other areas and ample supplies are limiting trades reaction.
The firm Stone X released their customer based production survey. Their results followed trades expectations, producing record yield figures for both corn and soybeans. Their corn yield estimate came in at 182.4 bushels per acre, 3.9 bpa higher than the USDA’s July estimate and 3.5 bpa higher than the previous high. Record corn yields were noted for the states of Minnesota, Illinois, and South Dakota. Their soybean yield was estimated at 54.2 bpa, 4.4 bpa higher than the USDA’s July estimate and 2.1 bpa higher than the record yield produced in 2016-2017 crop. The USDA will update their balance sheets on August 12th.
For more information, you may contact Kristi Guse at (712)-260-6486, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Kristi Guse. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
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